Turnover was significant. In 1913, Ford Motor Co. hired 963 workers for every 100 jobs it filled during that year. In other words, the typical worker quit after only six weeks on the job. The costs of training all those new workers who would soon quit raised Ford’s costs unnecessarily. By more than doubling employee pay — and by reducing the amount of time workers had to work to earn this handsome income — Ford reduced turnover and lowered even further the cost of producing the Model T.

While workers whose annual incomes doubled were, of course, better able to afford to buy new Fords, they were also better able to afford to buy nearly everything. No doubt some Ford workers did buy new Model Ts because of their doubled incomes. It’s also undoubtedly true, however, that many Ford workers spent their higher incomes not on newly produced cars but, instead, on better housing, better home furnishings and better and more education for their children.

And even if each of Ford’s 14,000 workers in 1914 did buy a new Model T that year, Ford’s sales would have risen by only 5.7 percent. (The total number of Model T sales in 1914 was 260,720.) Doubling worker pay to generate a 5.7-percent increase in sales (of a product priced at about half of those workers’ annual incomes) is a very poor business practice.

[2] Bryan Caplan understandably needs more evidence before he buys the claim that the values of the marginal products of male workers are increasingly falling below levels that make it unprofitable for firms to employ males: http://econlog.econlib.org/archives/2013/11/rising_male_non.html

[3] In my most recent column in the Pittsburgh Tribune-Review I discuss the urban myth that the chief effect of Henry Ford’s doubling of his workers’ pay in 1914 was to better enable his workers to buy Ford cars: http://triblive.com/opinion/donaldboudreaux/5101846-74/ford-workers-pay#axzz2lqUoQjui

[4] The good folks at the Center for Competitive Politics are not pleased with the Treasury Department’s proposed new rules to regulate the activities of non-profit groups: http://www.campaignfreedom.org/2013/11/26/treasury-releases-vague-details-on-new-irs-rulemaking/

[6] James Pethokoukis riffs on one of Russ’s recent posts on demographics and data on the supposed economic stagnation of America’s middle-class: http://www.aei-ideas.org/2013/11/this-famous-income-inequality-chart/?utm_source=today&utm_medium=paramount&utm_campaign=112613